Article content

(Bloomberg) — US stocks resumed a three-week selloff Thursday, with the S&P 500 again falling 10% from its all-time high on renewed worries that tariffs will destabilize the American economy.

Article content

Article content

The S&P 500 fell 1.4% as of 2:05 p.m. in New York, more than wiping out a modest gain from Wednesday and pushing the index down 10% from its February record high, meeting the technical threshold for a correction. A close that far below last month’s peak would be the seventh-fastest correction in records going back to 1929, data compiled by Bloomberg show. Three of the seven-fastest drawdowns of this magnitude happened under President Donald Trump – in 2018, 2020 and now. The technology-heavy Nasdaq 100 Index retreated 1.8%.

Article content

“Most corrections take about two months to play out,” said John Kolovos, chief technical strategist at Macro Risk Advisors. While stocks appear oversold, “we aren’t there yet in terms of time, as it took us about two weeks to get to these levels,” he said.

All 11 S&P 500 sectors were down. Information technology, communication services and energy were the biggest laggards. Among the steepest single-stock declines, Tesla Inc. and Meta Platforms Inc. helped pull the so-called Magnificent Seven stocks down. Adobe Inc. was the worst-performing stock in the S&P 500, falling about 13% on a disappointing outlook.

Investor sentiment is souring even as recent data provided some evidence that the economy remains resilient. But the gloom is a sign of just how much Trump’s policies, particularly around trade, have rattled Wall Street nerves. At the same time, waves of firings at federal agencies and deportation threats have eroded confidence in the labor market’s strength.

US stocks have been struggling to regain footing after snapping a two-year uptrend earlier this week. Chart watchers say the S&P 500 needs to recapture its 200-day moving average, which is currently near 5,738. Some technical charts also show the S&P 500 is already at oversold levels. The index’s 14-day relative strength index is hovering around 30, a level that is often considered a technical signal that a selloff has gone too far.

Article content

Article content

One contrarian signal may give bulls hope. The closely watched bull-bear ratio from the American Association of Individual Investors survey fell to 0.3 in the week through Wednesday, the lowest level since September 2022. The last time the indicator was this low before then was in 2009, in the aftermath of the global financial crisis. Those prior instances have coincided with stretches of bear-market bottoms in US stocks.

The S&P 500 has wiped out about $5 trillion in market capitalization since that peak in February on concerns that the president’s trade policies would stall economic growth. The Nasdaq 100 has plunged more than 10% from a high last month as investors questioned lofty valuations of the biggest tech stocks.

Sentiment took a further hit Thursday after Trump threatened to impose a 200% tariff on wine, champagne and other alcoholic beverages from France and elsewhere in the European Union, the latest escalation in a brewing trade war.  

“Another day of tariff uncertainty is weighing upon markets once again,” Steve Sosnick, chief strategist at Interactive Brokers, wrote in a note. 

Article content

Several Wall Street strategists including at Goldman Sachs Group Inc. and Citigroup Inc. turned more cautious on US stocks this week. However, JPMorgan Chase & Co. strategists said equities were pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise.

Among single stock movers, Intel Corp. shares jumped after the chipmaker named Lip-Bu Tan as its chief executive officer. On the other hand, American Eagle Outfitters Inc. sank after the apparel retailer forecast lower-than-expected operating income. 

—With assistance from Jessica Menton and Esha Dey.

Article content